Current Return

Current Yield

The income from dividends (for stocks) or coupons (for bonds) divided by the market price of the security, expressed as a percentage. This is sometimes used in making the decision of whether or not to buy a security, but it does not accurately reflect its return, as the market price changes constantly. It is also called the current return or the running yield.

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Current return. Current return, also called current yield, is the amount of interest you earn on a bond in any given year, expressed as a percent of the current market price.

The current return will, in most cases, not be the same as the coupon rate, or the interest rate the bond pays calculated as a percentage of its par value.

For example, if the par, or face value, of a bond is $1,000 and the coupon rate is 5%, then the interest payments, or annual income, from the bond is $50 per year. If, however, the bond is trading at $900, then that $50 annual income is actually a current return of 5.6%.

The current return does not take capital gains or losses into account, so it is not a reflection of the total return on your bond investment.